Why are Latin American workers so strikingly unproductive?

Editor’s note (June 9th): The original headline in this article attracted criticism for the phrase “A land of useless workers”. We have changed it to make clear that we are analysing the social and economic costs of low productivity. Our aim is to draw attention to the structural causes of low average labour productivity in Latin American countries, including powerful oligopolies that mute competition and a large informal sector which forces many businesses to remain subscale. As the article makes clear, all of this is beyond the control of individual Latin Americans, whose living standards have suffered. We end with a call for better policymaking.

For half a century economies in Latin America have disappointed policymakers. For just as long, wonks have invented slogans to describe the source of the region’s abysmal growth. First economists lamented a “lost decade” in the 1980s, during which a chain of fiscal crises sent 16 governments in the region into default. The 1990s were spent in the “middle-income trap”, in which, the theory goes, the tricky leap from low- to high-tech industry stops countries from developing fully. Even when, in the late 2000s, commodity prices picked up, muttering began about the “resource curse”, which strikes when energy and mining bonanzas discourage investment in manufacturing.